Missing Sticks: Property Institutions and Income Dissipation in Indian Country

42 Pages Posted: 11 Dec 2014 Last revised: 8 Mar 2015

See all articles by Jacob Russ

Jacob Russ

George Mason University

Thomas Stratmann

George Mason University - Buchanan Center Political Economy; George Mason University - Mercatus Center; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: November 4, 2014

Abstract

This paper analyzes the economic consequences of property institutions. Federal land reform policy privatized American Indian reservation land in the 1880s. This reform intended to foster economic development on American Indian reservations by creating a system of individual private property. However, these new ownership rights were incomplete and accompanied by restrictions that have led to the fragmentation of land parcels into millions of shared ownership claims. Because land rights on Indian reservations do not include all of the sticks in the traditional property rights bundle, Indians face higher costs for real estate transactions. These additional costs preclude exchange and impede the productive use of reservation-land resources. Using data on Indian land ownership and agricultural leases in 2010, we provide the first quantitative evidence that incomplete property rights have worsened economic outcomes on Indian reservations. Our results show that increased ownership fractionation has reduced the incomes of American Indians on reservations and is associated with lower agricultural lease income, a measure of land productivity.

Keywords: American Indians, fractionation, land rights, property rights, institutions

Suggested Citation

Russ, Jacob and Stratmann, Thomas, Missing Sticks: Property Institutions and Income Dissipation in Indian Country (November 4, 2014). GMU Working Paper in Economics No. 15-22, Available at SSRN: https://ssrn.com/abstract=2536597 or http://dx.doi.org/10.2139/ssrn.2536597

Jacob Russ

George Mason University ( email )

4400 University Drive
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HOME PAGE: http://www.JakeRuss.com

Thomas Stratmann (Contact Author)

George Mason University - Buchanan Center Political Economy ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-2330 (Phone)

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

HOME PAGE: http://www.mercatus.org/scholars/thomas-stratmann

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

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